Credit: PropNex Research
Singapore’s public housing scheme enables all eligible Singapore Citizens (SC) to own an HDB flat, with the main intent of providing a home for all Singaporeans. This privilege has been extended to Singapore Permanent Residents (SPR), of at least 3 years, to acquire HDB resale flats.
After its MOP, SC can then own a private residential property and/or rent out the entire flat. The SPR are not allowed to rent out the HDB flat and will have to sell the HDB flat if they are buying a private residential property.
Many of us would aspire to upgrade to a bigger HDB flat, executive condominium or private residential when our HDB flats have fulfilled its MOP, especially when our families or incomes have grown over the five-year period.
Nevertheless, what we want to do with our existing HDB flats when it turn MOP will depend very much on individuals' aspirations and financial positions. The main consideration of many home owners is the capability to serve the mortgage loans. Now, what if you have the tool to break down the figures and give you the overview of your financial capabilities? You will realize that owning a private property is actually very much within reach.
Let me share with you a case study that I've recently assisted to give you a better illustration:
I've helped the couple work out their finances to determine whether they can afford to upgrade. It takes into consideration based on cash-on-hand and CPF amount, and works out the monthly repayment depending on the purchase price of the property.
Understanding what your limits are and how comfortable are you with the monthly payments will empower you to make more informed moves. As you can see from Jane's breakdown of figures, it shows the monthly mortgage repayment needed in the different phases of construction if it is a new launch.
As you may be aware the average household income growth is at 2.4% annually, see below chart. Comparing to those who progress through property, making a phenomenal profit of $300,000 within the span of 3 to 4 years, would you like to be one of them?
Average household income growth (%) from 2002 to 2019
High Park Residences (2015) & Parc Clematis (2020) transactions
Comparing of two similar condominium projects, though at different locations, but has similar home owners profile, we can see that in just a span of 5years, the property prices has increase so much.
Looking at your annual income growth, bonuses and savings, are you able to garner similar returns from sale of property? While your mortgage clock is still favourable, are you leveraging it to help you grow your assets?
Achieving financial freedom is definitely possible with meticulous planning and commitment. If you want to be that person to make your hard-earned money work for you, let me show you over a cup of coffee.
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